Recent trends indicate an increased inclination to hire contractors among UK employers.
- A notable 32% of employers intend to hire more contract staff this year.
- The forthcoming IR35 offset rule is influencing the hiring decisions of over 25% of businesses.
- Employers seek temporary hires for project completion and specialised skills.
- Challenges persist regarding compliance and sourcing skilled contractors.
The recruitment landscape in the UK is seeing a shift as 32% of employers express a preference towards hiring contractors in the current year. The findings are sourced from a report by the specialist recruitment firm, Robert Walters. This preference is partly driven by the imminent changes to the IR35 regulations, which over a quarter of employers find encouraging for increasing contract roles.
A critical factor influencing this trend is the IR35 offset rule, effective from April 6. It facilitates the offsetting of taxes already paid by contractors against the PAYE tax liability claimed by clients, thereby mitigating the risk of double taxation for employers. However, a significant proportion of firms, about 40%, remain uncertain about the rule’s implications, indicating the necessity for enhanced awareness and education about these regulatory adjustments.
The demand for specialised skills is another driving force behind the shift towards contract hires. Employers cite the need for expertise in project management and technical areas, such as DevOps and Business Analysis, as essential. Notably, job advertisements in IT and Finance sectors have increased by 33% and 25% respectively, underscoring the market’s demand for niche skill sets.
Despite the attractiveness of temporary talent for their adaptability and cost-effectiveness, challenges persist. Compliance and regulation issues represent a key hurdle for 25% of employers, while sourcing skilled contractors is a concern for 41%. Addressing these challenges requires strategic alterations in hiring practices, including concise skill requirements in job descriptions, efficiency in hiring timelines, competitive remuneration, and the inclusion of skills assessments during the hiring process.
Lucy Bisset from Robert Walters UK emphasises the importance of a strategic hiring approach amidst current economic conditions. With inflation and interest rates projected to decrease, companies are advised to bridge existing skills gaps through project-specific engagements. This approach optimises the utilisation of specialised temporary talent, aligning with the dynamic needs of the market.
Employers are strategically pivoting towards hiring contractors to address skills gaps, facilitated by upcoming regulatory changes and market demands.
